Size Matters With Employee Health Insurance

With all of the fuss and drama generated by the Affordable Care Act, colloquially known as “Obamacare”, it’s no surprise that there have been a lot of sweeping generalities and incorrect assumptions thrown around. A lot has been said about how the ACA puts new requirements on companies that offer health benefits to their employees, but as you’ll see, it’s hardly a one-size-fits-all proposition.

Size Really Does Matter

According to Requirements for Group Health Insurance Plans by Company Size, required benefits vary according to the size of the company. Coverage appears to begin with a well-defined baseline, and then as the company size increases, more requirements are cumulatively added. Let’s take a look at the different levels.

Defining The Baseline
Companies with less than 50 employees, in essence the smallest category, are required to provide baseline coverage. Some of the baseline benefits are:

Pre-Existing Conditions: It used to be that health plans could deny coverage based on pre-existing conditions. This is no longer the case. An insurance company can’t exclude or limit coverage anymore.

Essential Benefits: There are ten services that the ACA considers to be essential health benefits. They are:

preventive and wellness services and chronic disease management

emergency services

hospitalization

ambulatory patient services

laboratory services

maternity and newborn care

pediatric services, including oral/dental and vision care

rehabilitative and habilitative services and devices

mental health and substance abuse services

Guaranteed Acceptance: Have you ever seen those life insurance commercials where they say “No applicant will be refused!”? Say hello to the health care version, and it’s probably a lot less shady! But yes, employees who apply for coverage can’t be turned away, though there are a few defined exceptions.

Waiting Periods Limited to 90 Days: An employee’s membership in a company’s group health plan has to go into effect within 90 days of eligibility.

Companies With Between 50 and 99 Employees

These companies must provide the baseline coverage, as well as two other requirements. A company has to either offer their full-time employees an affordable health insurance plan, or pay a penalty. This provision, known as “pay or play”, doesn’t take effect until 2016, but has already given rise to stories of certain companies reducing some employees’ hours to part-time in order to avoid paying for health care. The second provision requires that businesses report certain insurance coverage information to both their employees and the IRS. This takes effect in 2015, but non-compliance penalties don’t kick in until 2016.

Companies With Between 100 and 249 Employees

Companies of this size have all of the above requirements, but with a few differences. Companies with more than 100 employees need to go along with “pay or play” in 2015, as opposed to the 2016 deadline in place for smaller companies. Also, the non-compliance penalty for the insurance coverage reporting requirement takes effect in 2015, not 2016.

Companies With 250 Employees or More

This final category has the same requirements and conditions that the 100-249 level does, with one additional condition. Any company that sponsors a health plan for their employers and files 250 or more W-2 forms must report the cost of coverage provided to each employee, on the W-2 form.